Setting up a business in America can be challenging if you are not a resident of the USA. But it isn’t necessarily as difficult as it first appears. There are lots of advantages to expanding to America as a foreign company, and we can help you every step of the way.

Contact us to find out exactly how we can help your business: we can hire US workers on your behalf, or we can work with your professional advisors to set up and manage your legal entity in the USA.

Read on to find out more about setting up a company in the USA as a foreign business.

Why expand into the US?

The USA has the largest economy in the world, which means those tenacious enough to expand to the US have the potential to reach new customers, diversify risk, leverage resources, and potentially increase profits.

Moreover, the US is a particularly attractive draw for British companies given the current political and economic climate; the US is already the top importer of British goods in the world, accounting for almost 15% of total UK exports.

The USA is also home to some of the most brilliant minds and business connections in the world, with locations such as Silicon Valley serving as the headquarters for almost half of all businesses in the Fortune 100. And, the USA's 'pioneering spirit' is appealing for UK businesses hoping to grow from strength to strength too, with US workers demonstrating a go-getter attitude and commitment to their work.

Also, the USA operates at the forefront of technological advancement, including advancements in aerospace, military equipment, pharmaceuticals and biotechnology, and IT operations. But most enticing of all is the fact that there is a great deal of risk capital in the US - making it a good place to raise money for a rapidly growing business.

How we can help

We can help you by hiring US workers on your behalf with our Employee Management Services. This core service takes the headache out of handling payroll, benefits, pensions and labor regulations, leaving you to manage your employees’ efforts to grow your business.

We can also help you set up and manage a legal entity with our Subsidiary Services. We’ll coordinate the communication strategies among your US and home country tax and legal professionals. Either through our US network of experts or our in-house advisors, we can help you lease office space, open a bank account, find a bookkeeper and more.

Please note: Foothold America does not provide tax or legal services, and is unable to provide tax or legal advice in connection with the services we provide to you. However, we can provide you referrals to such professionals upon your request.

Foothold America’s incorporation services will provide you with a properly created entity within the corporate entity laws in the jurisdiction of formation only - it does not provide you with an entity that is legally authorized to conduct your specific business within the United States.

Your market research will highlight whether or not there is demand for your product or service in a particular location. Considering this factor will also highlight competitor businesses, giving you the opportunity to think about how you can differentiate yourself from them.

As you research how to incorporate your business in America, you’ll notice that there are multiple routes of entry. Some businesses simply establish a branch company (an approach we typically do not recommend), whereas others enter with a shadow employer, or establish a subsidiary. It is important to work with your tax and legal advisors to choose the best option for you.

International businesses considering establishing a subsidiary in the USA typically incur costs of between $20,000 - $50,000, and there’s significant time investment required too: at least three or four months, assuming a standing start. The cheapest and fastest way to test the US market is to use a shadow employer - this is our core service here at Foothold America, employing US workers on your behalf.

Setting up a business in America will require choosing a state to incorporate in. The best location for your business will depend on a multitude of factors, including proximity to your target market and suppliers, local infrastructure, geography, climate and tax rates, among other considerations.

We can help you to incorporate your business in America. We also recommend that you engage a US attorney, an international tax consultant (who understands your domestic regime), and an accountant who understands how to prepare and submit records for US taxation. They will be able to advise you, and prepare and submit paperwork on your behalf. We can work with your professional advisors to set up and manage your subsidiary or other dedicated legal entity if needed.

US workers are tenacious, ambitious and renowned for their positive attitude, and they’re likely to have first-hand experience of what the US market requires too. We can help you if you would like us to hire US employees on your behalf. Or, we can assist you while you complete the necessary steps to hire US workers directly.

There are many more considerations to explore than those listed above, including the need to protect your intellectual property, whether or not you need to obtain any special licenses, and how you’re going to market your business in the US, for example.

Choosing a state

Each of the 50 states have their own rules and regulations that govern how you will need to structure and operate your business. The following information may be useful to consider before you incorporate your company in the USA:

What to consider

Results of your market research

Access to your target market

Where you’re most likely to conduct day to day operations (even if you sell into other states)

Rates of taxation

Initial set up fees

Annual fees

Geography

Time zones

Talent (US workers)

Resources and suppliers

The business environment

The legal system, Business Courts of Chancery etc.

Popular states

There are a few US states that foreign businesses may consider to be more tax-friendly than other locations around the world, such as Delaware, Nevada and Wyoming.

Delaware

Favorable taxation rates for businesses with complex structures, and large businesses

Directors and shareholders need not be residents of Delaware

Features a long-standing Business Court of Chancery

Nevada

Low rates of taxation

Business are not required to pay tax on corporation shares

It’s easy to issue shares in Nevada

Does not enforce individual income tax, or corporate or income tax

Wyoming

Typically the cheapest rates of taxation

Cheap annual renewal fees

No business license fees

Wyoming holds privacy and asset protection for business in high regard

Incorporating in the state with the lowest tax rate or renewal fees isn’t necessarily the right decision - particularly if it could mean incorporating in one state but doing business in another. Doing so could mean that may incur the second state's taxes and annual payments in addition to the first. We recommend that you work with your tax and legal advisors to choose the best option for you.

LLC, C Corporation or S Corporation?

If you are wondering how to register a company in America, you’ll need a clear strategy for structuring your US entity. Typically, most businesses benefit from forming a C corporation, though there are times where LLC or S corporations may be appropriate:

C Corporation

Most common type of corporation in the US

C corps may benefit from international tax treaties to avoid double taxation

Profits and losses pass through the business to each member of the S corp

Shares of stock can be sold - attracting investors

Perpetual existence, even if the owner leaves the company

Once a year filing requirement (unlike C corps which must file quarterly)

Restrictions on the domicile of the members

There are advantages and disadvantages to each of these structures. We’ll facilitate the conversation with your US and home country tax advisors to make sure all of your questions are answered.

Paperwork you’ll need to complete

Your US lawyer and tax consultant, or our Subsidiary Service professionals, will be able to assist you with all the necessary paperwork you’ll need to complete in order to register a business in the USA. However, you can expect to prepare the following:

Formation

A Certificate of Incorporation, (sometimes referred to as Articles of Incorporation, or Articles of Formation).

A SS-4 form, a W8/W9 form and a Good Standing Certificate from the relevant state authority (necessary for opening a US bank account).

Licenses and permits for the state your business is operating in.

Governance & Ownership

Details of shareholder agreements or operating agreements, as well as share or member certificates for each shareholder/member.

Tax

Documents to obtain an Employer Identification Number for tax purposes. This is a number issued by the Internal Revenue Service (IRS) to identify your business.

Due Diligence

You’ll be subject to due diligence checks to confirm that foreign nationals from your country are permitted to own US assets (including US companies).

Common challenges

Foreign businesses face a series of hurdles when undertaking to register a company in America. There’s a significant amount of ‘red tape’ to contend with, a series of foreign laws and regulations to understand and comply with, and the challenge of finding professionals to handle those matters.

There’s also the requirement to carry out international accounting (which again requires a professional to prepare and submit records on your behalf), as well as tackling issues such as human resources, identifying suppliers and finding office space.